UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2023

or

☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from ____________ to ____________.

Commission File Number: 001-33519

Public Storage

(Exact name of registrant as specified in its charter)

Maryland	95-3551121
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)
701 Western Avenue, Glendale, California	91201-2349
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (818) 244-8080.

Former name, former address and former fiscal, if changed since last report: N/A

Securities registered pursuant to Section 12b of the Act:

Title of Class	Trading Symbol	Name of each exchange on which registered
Common Shares, $0.10 par value	PSA	New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 5.150% Cum Pref Share, Series F, $0.01 par value	PSAPrF	New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 5.050% Cum Pref Share, Series G, $0.01 par value	PSAPrG	New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 5.600% Cum Pref Share, Series H, $0.01 par value	PSAPrH	New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 4.875% Cum Pref Share, Series I, $0.01 par value	PSAPrI	New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 4.700% Cum Pref Share, Series J, $0.01 par value	PSAPrJ	New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 4.750% Cum Pref Share, Series K, $0.01 par value	PSAPrK	New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 4.625% Cum Pref Share, Series L, $0.01 par value	PSAPrL	New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 4.125% Cum Pref Share, Series M, $0.01 par value	PSAPrM	New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 3.875% Cum Pref Share, Series N, $0.01 par value	PSAPrN	New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 3.900% Cum Pref Share, Series O, $0.01 par value	PSAPrO	New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 4.000% Cum Pref Share, Series P, $0.01 par value	PSAPrP	New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 3.950% Cum Pref Share, Series Q, $0.01 par value	PSAPrQ	New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 4.000% Cum Pref Share, Series R, $0.01 par value	PSAPrR	New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 4.100% Cum Pref Share, Series S, $0.01 par value	PSAPrS	New York Stock Exchange
0.875% Senior Notes due 2032	PSA32	New York Stock Exchange
0.500% Senior Notes due 2030	PSA30	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for at least the past 90 days.

☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	Accelerated filer	Non-accelerated filer	Smaller reporting company	Emerging growth company
☒	☐	☐	☐	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

☐ Yes ☒ No

Indicate the number of the registrant’s outstanding common shares of beneficial interest, as of April 28, 2023:

Common Shares of beneficial interest, $0.10 par value per share – 175,812,057 shares

PUBLIC STORAGE

INDEX

PART I	FINANCIAL INFORMATION	Pages
Item 1.	Consolidated Financial Statements (Unaudited)
	Consolidated Balance Sheets	1
	Consolidated Statements of Income	2
	Consolidated Statements of Comprehensive Income	3
	Consolidated Statements of Equity and Redeemable Noncontrolling Interests	4-5
	Consolidated Statements of Cash Flows	6-7
	Condensed Notes to Consolidated Financial Statements	8-20
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21-44
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	45
Item 4.	Controls and Procedures	45
PART II	OTHER INFORMATION (Items 3, 4 and 5 are not applicable)
Item 1.	Legal Proceedings	46
Item 1A.	Risk Factors	46
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	46
Item 6.	Exhibits	46

PUBLIC STORAGE

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except share data)

	March 31, 2023		December 31, 2022
	(Unaudited)
ASSETS
Cash and equivalents	$	695,424	$	775,253
Real estate facilities, at cost:
Land	5,293,989		5,273,073
Buildings	19,129,120		18,946,053
	24,423,109		24,219,126
Accumulated depreciation	(8,759,281)		(8,554,155)
	15,663,828		15,664,971
Construction in process	377,348		372,992
	16,041,176		16,037,963
Investments in unconsolidated real estate entities	285,692		275,752
Goodwill and other intangible assets, net	219,730		232,517
Other assets	265,756		230,822
Total assets	$	17,507,778	$	17,552,307
LIABILITIES AND EQUITY
Notes payable	$	6,899,335	$	6,870,826
Accrued and other liabilities	470,395		514,680
Total liabilities	7,369,730		7,385,506
Commitments and contingencies (Note 14)
Equity:
Public Storage shareholders’ equity:
Preferred Shares, $0.01 par value, 100,000,000 shares authorized, 174,000 shares issued (in series) and outstanding, (174,000 at December 31, 2022) at liquidation preference	4,350,000		4,350,000
Common Shares, $0.10 par value, 650,000,000 shares authorized, 175,466,222 shares issued and outstanding (175,265,668 shares at December 31, 2022)	17,547		17,527
Paid-in capital	5,923,564		5,896,423
Accumulated deficit	(168,952)		(110,231)
Accumulated other comprehensive loss	(76,448)		(80,317)
Total Public Storage shareholders’ equity	10,045,711		10,073,402
Noncontrolling interests	92,337		93,399
Total equity	10,138,048		10,166,801
Total liabilities and equity	$	17,507,778	$	17,552,307

See accompanying notes.

1

PUBLIC STORAGE

CONSOLIDATED STATEMENTS OF INCOME

(Amounts in thousands, except per share amounts)

(Unaudited)

	Three Months Ended March 31,
	2023		2022
Revenues:
Self-storage facilities	$	1,032,184	$	917,015
Ancillary operations	62,048		56,430
	1,094,232		973,445
Expenses:
Self-storage cost of operations	268,615		245,494
Ancillary cost of operations	19,676		15,515
Depreciation and amortization	221,650		222,128
General and administrative	25,544		23,069
Interest expense	36,101		33,124
	571,586		539,330
Other increases (decreases) to net income:
Interest and other income	18,634		3,379
Equity in earnings of unconsolidated real estate entities	5,995		43,424
Foreign currency exchange (loss) gain	(26,860)		35,377
Net income	520,415		516,295
Allocation to noncontrolling interests	(2,707)		(2,352)
Net income allocable to Public Storage shareholders	517,708		513,943
Allocation of net income to:
Preferred shareholders	(48,678)		(48,365)
Restricted share units	(1,442)		(1,454)
Net income allocable to common shareholders	$	467,588	$	464,124
Net income per common share:
Basic	$	2.67	$	2.65
Diluted	$	2.65	$	2.63
Basic weighted average common shares outstanding	175,451		175,170
Diluted weighted average common shares outstanding	176,228		176,336

See accompanying notes.

2

PUBLIC STORAGE

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Amounts in thousands)

(Unaudited)

	Three Months Ended March 31,
	2023		2022
Net income	$	520,415	$	516,295
Foreign currency translation gain (loss) on investment in Shurgard	3,869		(6,795)
Total comprehensive income	524,284		509,500
Allocation to noncontrolling interests	(2,707)		(2,352)
Comprehensive income allocable to Public Storage shareholders	$	521,577	$	507,148

See accompanying notes.

3

PUBLIC STORAGE

CONSOLIDATED STATEMENTS OF EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS

Three Months Ended March 31, 2023

(Amounts in thousands, except share and per share amounts)

(Unaudited)

	Cumulative Preferred Shares		Common Shares		Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Public Storage Shareholders' Equity		Noncontrolling Interests		Total Equity
Balances at December 31, 2022	$	4,350,000	$	17,527	$	5,896,423	$	(110,231)	$	(80,317)	$	10,073,402	$	93,399	$	10,166,801
Issuance of common shares in connection with share-based compensation (200,554 shares) (Note 11)	—		20		25,159		—		—		25,179		—		25,179
Taxes withheld upon net share settlement of restricted share units (Note 11)	—		—		(8,932)		—		—		(8,932)		—		(8,932)
Share-based compensation cost (Note 11)	—		—		10,914		—		—		10,914		—		10,914
Contributions by noncontrolling interests	—		—		—		—		—		—		4		4
Net income	—		—		—		520,415		—		520,415		—		520,415
Net income allocated to noncontrolling interests	—		—		—		(2,707)		—		(2,707)		2,707		—
Distributions to:
Preferred shareholders (Note 9)	—		—		—		(48,678)		—		(48,678)		—		(48,678)
Noncontrolling interests	—		—		—		—		—		—		(3,773)		(3,773)
Common shareholders and restricted share unitholders ($3.00 per share) (Note 9)	—		—		—		(527,751)		—		(527,751)		—		(527,751)
Other comprehensive income	—		—		—		—		3,869		3,869		—		3,869
Balances at March 31, 2023	$	4,350,000	$	17,547	$	5,923,564	$	(168,952)	$	(76,448)	$	10,045,711	$	92,337	$	10,138,048

See accompanying notes.

4

PUBLIC STORAGE

CONSOLIDATED STATEMENTS OF EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS

Three Months Ended March 31, 2022

(Amounts in thousands, except share and per share amounts)

(Unaudited)

	Cumulative Preferred Shares		Common Shares		Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Public Storage Shareholders' Equity		Noncontrolling Interests		Total Equity		Redeemable Noncontrolling Interests
Balances at December 31, 2021	$	4,100,000	$	17,513	$	5,821,667	$	(550,416)	$	(53,587)	$	9,335,177	$	20,112	$	9,355,289	$	68,249
Issuance of 10,000 preferred shares	250,000		—		(7,168)		—		—		242,832		—		242,832		—
Issuance of common shares in connection with share-based compensation (77,984 shares)	—		8		8,099		—		—		8,107		—		8,107		—
Taxes withheld upon net settlement of restricted share units	—		—		(10,574)		—		—		(10,574)		—		(10,574)		—
Share-based compensation cost	—		—		15,650		—		—		15,650		—		15,650		—
Contributions by noncontrolling interests	—		—		—		—		—		—		791		791		15,426
Net income	—		—		—		516,295		—		516,295		—		516,295		—
Net income allocated to noncontrolling interests	—		—		—		(2,352)		—		(2,352)		1,692		(660)		660
Distributions to:
Preferred shareholders	—		—		—		(48,365)		—		(48,365)		—		(48,365)		—
Noncontrolling interests	—		—		—		—		—		—		(2,046)		(2,046)		(509)
Common shareholders and restricted share unitholders ($2.00 per share)	—		—		—		(351,263)		—		(351,263)		—		(351,263)		—
Other comprehensive loss	—		—		—		—		(6,795)		(6,795)		—		(6,795)		—
Balances at March 31, 2022	$	4,350,000	$	17,521	$	5,827,674	$	(436,101)	$	(60,382)	$	9,698,712	$	20,549	$	9,719,261	$	83,826

See accompanying notes.

5

PUBLIC STORAGE

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)

	For the Three Months Ended March 31,
	2023		2022
Cash flows from operating activities:
Net income	$	520,415	$	516,295
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization	221,650		222,128
Equity in earnings of unconsolidated real estate entities	(5,995)		(43,424)
Distributions from cumulative equity in earnings of unconsolidated real estate entities	324		15,501
Unrealized foreign currency exchange loss (gain)	26,825		(35,377)
Share-based compensation expense	9,845		13,928
Other	2,890		2,042
Changes in operating assets and liabilities:
Other assets	(36,611)		(8,885)
Accrued and other liabilities	(42,450)		(25,967)
Net cash flows from operating activities	696,893		656,241
Cash flows from investing activities:
Capital expenditures to maintain real estate facilities	(96,642)		(99,549)
Development and expansion of real estate facilities	(68,874)		(76,705)
Acquisition of real estate facilities and intangible assets	(46,795)		(112,277)
Net cash flows used in investing activities	(212,311)		(288,531)
Cash flows from financing activities:
Repayments on notes payable	(129)		(236)
Issuance of preferred shares	—		242,832
Issuance of common shares in connection with share-based compensation	25,116		8,073
Taxes paid upon net share settlement of restricted share units	(8,932)		(10,574)
Contributions by noncontrolling interests	4		791
Distributions paid to preferred shareholders, common shareholders and restricted share unitholders	(576,251)		(399,584)
Distributions paid to noncontrolling interests	(3,773)		(2,555)
Net cash flows used in financing activities	(563,965)		(161,253)
Net cash flows (used in) from operating, investing, and financing activities	(79,383)		206,457
Net effect of foreign exchange impact on cash and equivalents, including restricted cash	—		173
(Decrease) Increase in cash and equivalents, including restricted cash	$	(79,383)	$	206,630

See accompanying notes.

6

PUBLIC STORAGE

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)

	For the Three Months Ended March 31,
	2023		2022
Cash and equivalents, including restricted cash at beginning of the period:
Cash and equivalents	$	775,253	$	734,599
Restricted cash included in other assets	29,904		26,691
	$	805,157	$	761,290
Cash and equivalents, including restricted cash at end of the period:
Cash and equivalents	$	695,424	$	940,524
Restricted cash included in other assets	30,350		27,396
	$	725,774	$	967,920
Supplemental schedule of non-cash investing and financing activities:
Costs incurred during the period remaining unpaid at period end for:
Capital expenditures to maintain real estate facilities	$	(11,514)	$	(14,119)
Construction or expansion of real estate facilities	(50,625)		(42,245)
Real estate acquired in exchange for noncontrolling interests	—		(15,426)

See accompanying notes.

7

PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

(Unaudited)

1.Description of the Business

Public Storage (referred to herein as “the Company,” “we,” “us,” or “our”), a Maryland real estate investment trust that has elected to be taxed as a real estate investment trust (“REIT”), was organized in 1980. Our principal business activities include the ownership and operation of self-storage facilities that offer storage spaces for lease, generally on a month-to-month basis, for personal and business use, ancillary activities such as tenant reinsurance, merchandise sales, and third party management, as well as the acquisition and development of additional self-storage space.

At March 31, 2023, we had direct and indirect equity interests in 2,877 self-storage facilities (with approximately 204.9 million net rentable square feet) located in 40 states in the United States (“U.S.”) operating under the Public Storage® name, and 1.2 million net rentable square feet of commercial and retail space.

At March 31, 2023, we owned a 35% common equity interest in Shurgard Self Storage Limited (“Shurgard”), a public company traded on the Euronext Brussels under the “SHUR” symbol, which owned 266 self-storage facilities (with approximately 15 million net rentable square feet) located in seven Western European countries, all operating under the Shurgard® name.

2.Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation

We have prepared the accompanying interim consolidated financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”) as set forth in the Accounting Standards Codification of the Financial Accounting Standards Board (“FASB”), and in conformity with the rules and regulations of the Securities and Exchange Commission (“SEC”). In our opinion, the interim consolidated financial statements presented herein reflect all adjustments, primarily of a normal recurring nature, that are necessary to present fairly the interim consolidated financial statements. Because they do not include all of the disclosures required by GAAP for complete annual financial statements, these interim consolidated financial statements should be read together with the audited Consolidated Financial Statements and related Notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

Certain amounts previously reported in our March 31, 2022 Statements of Cash Flows have been reclassified to conform to the March 31, 2023 presentation, with respect to the separate presentation of changes in operating assets and liabilities in the cash flows from operating activities section.

Disclosures of the number and square footage of facilities, as well as the number and coverage of tenant reinsurance policies (Note 14) are unaudited and outside the scope of our independent registered public accounting firm’s review of our financial statements in accordance with the standards of the Public Company Accounting Oversight Board (U.S.).

Operating results for the three months ended March 31, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023.

Summary of Significant Accounting Policies

There have been no significant changes to the Company's significant accounting policies described in Note 2, Basis of Presentation and Summary of Significant Accounting Policies, in Notes to Consolidated Financial Statements included in Item 8 of Part II of the Company's Annual Report on Form 10-K for the year ended December 31, 2022.

8

PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

(Unaudited)

3.Real Estate Facilities

Activity in real estate facilities during the three months ended March 31, 2023 is as follows:

	Three Months Ended March 31, 2023
	(Amounts in thousands)
Operating facilities, at cost:
Beginning balance	$	24,219,126
Capital expenditures to maintain real estate facilities	93,740
Acquisitions	44,936
Developed or expanded facilities opened for operation	65,307
Ending balance	24,423,109
Accumulated depreciation:
Beginning balance	(8,554,155)
Depreciation expense	(205,126)
Ending balance	(8,759,281)
Construction in process:
Beginning balance	372,992
Costs incurred to develop and expand real estate facilities	70,981
Write-off of cancelled projects	(1,318)
Developed or expanded facilities opened for operation	(65,307)
Ending balance	377,348
Total real estate facilities at March 31, 2023	$	16,041,176

During the three months ended March 31, 2023, we acquired five self-storage facilities (0.3 million net rentable square feet of storage space), for a total cost of $46.8 million in cash. Approximately $1.9 million of the total cost was allocated to intangible assets. We completed development and redevelopment activities costing $65.3 million during the three months ended March 31, 2023, adding 0.4 million net rentable square feet of self-storage space. Construction in process at March 31, 2023 consisted of projects to develop new self-storage facilities and expand existing self-storage facilities.

9

PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

(Unaudited)

4.Investments in Unconsolidated Real Estate Entities

The following tables set forth our investments in, and equity in earnings of, the Unconsolidated Real Estate Entities (amounts in thousands):

	Investments in Unconsolidated Real Estate Entities at
	March 31, 2023		December 31, 2022
Shurgard	$	285,692	$	275,752

	Equity in Earnings of Unconsolidated Real Estate Entities for the
	Three Months Ended March 31,
	2023		2022
PSB	$	—	$	36,886
Shurgard	5,995		6,538
Total	$	5,995	$	43,424

Investment in PSB

On July 20, 2022, in connection with the closing of the merger of PS Business Parks, Inc. (“PSB”) with affiliates of Blackstone Real Estate (“Blackstone”), we completed the sale of our 41% common equity interest in PSB in its entirety. At the close of the merger transaction, we received a total of $2.7 billion of cash proceeds and recognized a gain of $2.1 billion during the third quarter of 2022.

Since the sale of PSB in July 2022, we no longer recognize equity in earnings or receive cash distributions from PSB. During the three months ended March 31, 2022, we received cash distributions from PSB totaling $15.2 million.

Investment in Shurgard

Throughout all periods presented, we effectively owned, directly and indirectly 31,268,459 Shurgard common shares, representing a 35% equity interest in Shurgard.

Based upon the closing price at March 31, 2023 (€44.10 per share of Shurgard common stock, at 1.088 exchange rate of U.S. Dollars to the Euro), the shares we owned had a market value of approximately $1.5 billion.

Our equity in earnings of Shurgard comprised our equity share of Shurgard’s net income, less amortization of the Shurgard Basis Differential (defined below). During each of the three months ended March 31, 2023 and 2022, we received $0.9 million of trademark license fees that Shurgard pays to us for the use of the Shurgard® trademark. We eliminated $0.3 million of intra-entity profits and losses for each of the three months ended March 31, 2023 and 2022, representing our equity share of the trademark license fees. We classify the remaining license fees we receive from Shurgard as interest and other income on our income statement.

At March 31, 2023, our investment in Shurgard’s real estate assets exceeded our pro-rata share of the underlying amounts on Shurgard’s balance sheet by approximately $63.3 million ($67.8 million at December 31, 2022). This differential (the “Shurgard Basis Differential”) includes our basis adjustments in Shurgard’s real estate assets net of related deferred income taxes. The Shurgard Basis Differential is being amortized as a reduction to equity in earnings of the Unconsolidated Real Estate Entities. Such amortization totaled approximately $4.5 million and $1.3 million during the three months ended March 31, 2023 and 2022, respectively.

As of March 31, 2023 and 2022, we translated the book value of our investment in Shurgard from Euro to U.S. Dollars and recorded $3.9 million other comprehensive income and $6.8 million other comprehensive loss during the three month ended March 31, 2023 and 2022, respectively.

10

PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

(Unaudited)

5.Goodwill and Other Intangible Assets

Goodwill and other intangible assets consisted of the following (amounts in thousands):

	At March 31, 2023						At December 31, 2022
	Gross Book Value		Accumulated Amortization		Net Book Value		Gross Book Value		Accumulated Amortization		Net Book Value
Goodwill	$	165,843	$	—	$	165,843	$	165,843	$	—	$	165,843
Shurgard® Trade Name	18,824		—		18,824		18,824		—		18,824
Finite-lived intangible assets, subject to amortization	759,964		(724,901)		35,063		758,106		(710,256)		47,850
Total goodwill and other intangible assets	$	944,631	$	(724,901)	$	219,730	$	942,773	$	(710,256)	$	232,517

Finite-lived intangible assets consist primarily of acquired customers in place. Amortization expense related to intangible assets subject to amortization was $14.6 million and $33.9 million for the three months ended March 31, 2023 and 2022, respectively. During the three months ended March 31, 2023, intangibles increased $1.9 million, in connection with the acquisition of real estate facilities (Note 3).

The estimated future amortization expense for our finite-lived intangible assets at March 31, 2023 is as follows (amounts in thousands):

Year	Amount
Remainder of 2023	$	23,545
2024	6,175
Thereafter	5,343
Total	$	35,063

6.Credit Facility

We have a revolving credit agreement (the “Credit Facility”) with a $500 million borrowing limit that matures on April 19, 2024. Amounts drawn on the Credit Facility bear annual interest at rates ranging from LIBOR plus 0.7% to LIBOR plus 1.350% depending upon the ratio of our Total Indebtedness to Gross Asset Value (as defined in the Credit Facility) (LIBOR plus 0.75% at March 31, 2023). We are also required to pay a quarterly facility fee ranging from 0.07% per annum to 0.25% per annum depending upon the ratio of our Total Indebtedness to our Gross Asset Value (0.10% per annum at March 31, 2023). At March 31, 2023 and May 3, 2023, we had no outstanding borrowings under this Credit Facility. We had undrawn standby letters of credit, which reduce our borrowing capacity, totaling $18.6 million at March 31, 2023 ($18.6 million at December 31, 2022). The Credit Facility has various customary restrictive covenants with which we were in compliance at March 31, 2023.

11

PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

(Unaudited)

7.Notes Payable

Our notes payable are reflected net of issuance costs (including original issue discounts), which are amortized as interest expense on the effective interest method over the term of each respective note. Our notes payable at March 31, 2023 and December 31, 2022 are set forth in the tables below:

			Amounts at March 31, 2023
	Coupon Rate	Effective Rate	Principal		Unamortized Costs		Book  Value		Fair  Value
			($ amounts in thousands)
U.S. Dollar Denominated Unsecured Debt
Notes due April 23, 2024	SOFR+0.47%	5.091%	$	700,000	$	(749)	$	699,251	$	694,272
Notes due February 15, 2026	0.875%	1.030%	500,000		(2,137)		497,863		449,291
Notes due November 9, 2026	1.500%	1.640%	650,000		(3,139)		646,861		586,358
Notes due September 15, 2027	3.094%	3.218%	500,000		(2,360)		497,640		470,930
Notes due May 1, 2028	1.850%	1.962%	650,000		(3,430)		646,570		569,513
Notes due November 9, 2028	1.950%	2.044%	550,000		(2,698)		547,302		479,934
Notes due May 1, 2029	3.385%	3.459%	500,000		(1,869)		498,131		465,044
Notes due May 1, 2031	2.300%	2.419%	650,000		(5,526)		644,474		539,458
Notes due November 9, 2031	2.250%	2.322%	550,000		(3,046)		546,954		449,666
			5,250,000		(24,954)		5,225,046		4,704,466
Euro Denominated Unsecured Debt
Notes due April 12, 2024	1.540%	1.540%	108,779		—		108,779		105,871
Notes due November 3, 2025	2.175%	2.175%	263,259		—		263,259		251,539
Notes due September 9, 2030	0.500%	0.640%	761,451		(8,332)		753,119		561,682
Notes due January 24, 2032	0.875%	0.978%	543,893		(4,724)		539,169		387,388
			1,677,382		(13,056)		1,664,326		1,306,480
Mortgage Debt, secured by 5 real estate facilities with a net book value of $16.9 million	3.407%	3.407%	9,963		—		9,963		9,656
			$	6,937,345	$	(38,010)	$	6,899,335	$	6,020,602

12

PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

(Unaudited)

	Amounts at
	December 31, 2022
	Book Value		Fair Value
	($ amounts in thousands)
U.S. Dollar Denominated Unsecured Debt
Notes due April 23, 2024	699,075		691,309
Notes due February 15, 2026	497,678		441,849
Notes due November 9, 2026	646,643		578,899
Notes due September 15, 2027	497,508		466,029
Notes due May 1, 2028	646,401		558,197
Notes due November 9, 2028	547,182		468,509
Notes due May 1, 2029	498,053		456,855
Notes due May 1, 2031	644,303		530,390
Notes due November 9, 2031	546,866		443,514
	5,223,709		4,635,551
Euro Denominated Unsecured Debt
Notes due April 12, 2024	107,035		104,344
Notes due November 3, 2025	259,039		246,119
Notes due September 9, 2030	740,634		566,204
Notes due January 24, 2032	530,317		396,297
	1,637,025		1,312,964
Mortgage Debt	10,092		9,568
	$	6,870,826	$	5,958,083

U.S. Dollar Denominated Unsecured Notes

The U.S. Dollar denominated unsecured notes (the “U.S. Dollar Denominated Unsecured Notes”) have various financial covenants with which we were in compliance at March 31, 2023. Included in these covenants are (a) a maximum Debt to Total Assets of 65% (approximately 14% at March 31, 2023) and (b) a minimum ratio of Adjusted EBITDA to Interest Expense of 1.5x (approximately 25x for the twelve months ended March 31, 2023) as well as covenants limiting the amount we can encumber our properties with mortgage debt.

Euro Denominated Unsecured Notes

Our Euro denominated unsecured notes (the “Euro Notes”) consist of four tranches: (i) €242.0 million issued to institutional investors on November 3, 2015, (ii) €100.0 million issued to institutional investors on April 12, 2016, (iii) €500.0 million issued in a public offering on January 24, 2020, and (iv) €700.0 million issued in a public offering on September 9, 2021. The Euro Notes have financial covenants similar to those of the U.S. Dollar Denominated Unsecured Notes.

We reflect changes in the U.S. Dollar equivalent of the amount payable including the associated interest, as a result of changes in foreign exchange rates as “Foreign currency exchange (loss) gain” on our income statement (losses of $27.1 million and gains of $35.4 million for the three months ended March 31, 2023 and 2022, respectively).

Mortgage Notes

We assumed our non-recourse mortgage debt in connection with property acquisitions, and we recorded such debt at fair value with any premium or discount to the stated note balance amortized using the effective interest method.

13

PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

(Unaudited)

At March 31, 2023, the related contractual interest rates of our mortgage notes are fixed, ranging between 3.2% and 7.1%, and mature between November 1, 2023 and July 1, 2030.

At March 31, 2023, approximate principal maturities of our Notes Payable are as follows (amounts in thousands):

	Unsecured Debt		Mortgage Debt		Total
Remainder of 2023	$	—	$	8,141	$	8,141
2024	808,779		124		808,903
2025	263,259		131		263,390
2026	1,150,000		138		1,150,138
2027	500,000		140		500,140
Thereafter	4,205,344		1,289		4,206,633
	$	6,927,382	$	9,963	$	6,937,345
Weighted average effective rate	2.2%		3.4%		2.2%

Cash paid for interest totaled $22.4 million and $22.2 million for the three months ended March 31, 2023 and 2022, respectively. Interest capitalized as real estate totaled $1.7 million and $1.2 million for the three months ended March 31, 2023 and 2022, respectively.

8.Noncontrolling Interests

There are noncontrolling interests related to several subsidiaries we consolidate of which we do not own 100% of the equity. At March 31, 2023, certain of these subsidiaries have issued 499,966 partnership units to third-parties that are convertible on a one-for-one basis (subject to certain limitations) into common shares of the Company at the request of the unitholder.

14

PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

(Unaudited)

9.Shareholders’ Equity

Preferred Shares

At March 31, 2023 and December 31, 2022, we had the following series of Cumulative Preferred Shares (“Preferred Shares”) outstanding:

				At March 31, 2023			At December 31, 2022
Series	Earliest Redemption Date	Dividend Rate		Shares Outstanding	Liquidation Preference		Shares Outstanding	Liquidation Preference
				(Dollar amounts in thousands)
Series F	6/2/2022	5.150	%	11,200	$	280,000	11,200	$	280,000
Series G	8/9/2022	5.050	%	12,000	300,000		12,000	300,000
Series H	3/11/2024	5.600	%	11,400	285,000		11,400	285,000
Series I	9/12/2024	4.875	%	12,650	316,250		12,650	316,250
Series J	11/15/2024	4.700	%	10,350	258,750		10,350	258,750
Series K	12/20/2024	4.750	%	9,200	230,000		9,200	230,000
Series L	6/17/2025	4.625	%	22,600	565,000		22,600	565,000
Series M	8/14/2025	4.125	%	9,200	230,000		9,200	230,000
Series N	10/6/2025	3.875	%	11,300	282,500		11,300	282,500
Series O	11/17/2025	3.900	%	6,800	170,000		6,800	170,000
Series P	6/16/2026	4.000	%	24,150	603,750		24,150	603,750
Series Q	8/17/2026	3.950	%	5,750	143,750		5,750	143,750
Series R	11/19/2026	4.000	%	17,400	435,000		17,400	435,000
Series S	1/13/2027	4.100	%	10,000	250,000		10,000	250,000
Total Preferred Shares				174,000	$	4,350,000	174,000	$	4,350,000

The holders of our Preferred Shares have general preference rights with respect to liquidation, quarterly distributions, and any accumulated unpaid distributions. Except as noted below, holders of the Preferred Shares do not have voting rights. In the event of a cumulative arrearage equal to six quarterly dividends, holders of all outstanding series of preferred shares (voting as a single class without regard to series) will have the right to elect two additional members to serve on our Board of Trustees (our “Board”) until the arrearage has been cured. At March 31, 2023, there were no dividends in arrears. The affirmative vote of at least 66.67% of the outstanding shares of a series of Preferred Shares is required for any material and adverse amendment to the terms of such series. The affirmative vote of at least 66.67% of the outstanding shares of all of our Preferred Shares, voting as a single class, is required to issue shares ranking senior to our Preferred Shares.

Except under certain conditions relating to the Company’s qualification as a REIT, the Preferred Shares are not redeemable prior to the dates indicated on the table above. On or after the respective dates, each of the series of Preferred Shares is redeemable at our option, in whole or in part, at $25.00 per depositary share, plus accrued and unpaid dividends. Holders of the Preferred Shares cannot require us to redeem such shares.

Upon issuance of our Preferred Shares, we classify the liquidation value as preferred equity on our consolidated balance sheet with any issuance costs recorded as a reduction to Paid-in capital.

Dividends

On February 4, 2023, our Board of Trustees declared a 50% increase in its regular common quarterly dividend from $2.00 to $3.00 per share. The distribution equates to an annualized increase to the Company’s regular common dividend from $8.00 to $12.00 per share.

15

PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

(Unaudited)

Common share dividends paid, including amounts paid to our restricted share unitholders, totaled $527.6 million ($3.00 per share) and $351.2 million ($2.00 per share) for the three months ended March 31, 2023 and 2022, respectively. Preferred share dividends paid totaled $48.7 million and $48.4 million for the three months ended March 31, 2023 and 2022, respectively.

10.Related Party Transactions

At March 31, 2023, Tamara Hughes Gustavson, a current member of our Board, held less than a 0.1% equity interest in, and is a manager of, a limited liability company that owns 65 self-storage facilities in Canada. Two of Ms. Gustavson’s adult children owned the remaining equity interest in the limited liability company. These facilities operate under the Public Storage® tradename, which we license to the owners of these facilities for use in Canada on a royalty-free, non-exclusive basis. We have no ownership interest in these facilities and we do not own or operate any facilities in Canada. If we chose to acquire or develop our own facilities in Canada, we would have to share the use of the Public Storage® name in Canada. We have a right of first refusal, subject to limitations, to acquire the stock or assets of the corporation engaged in the operation of these facilities if their owners agree to sell them. Our subsidiaries reinsure risks relating to loss of goods stored by customers in these facilities, and have received premium payments of approximately $0.5 million for each of the three months ended March 31, 2023 and 2022.

11.Share-Based Compensation

Under various share-based compensation plans and under terms established or modified by our Board or a committee thereof, we grant equity awards to trustees, officers, and key employees, including non-qualified options to purchase the Company’s common shares, restricted share units (“RSUs”), deferred share units (“DSUs”), and unrestricted common shares issued in lieu of trustee compensation.

We recorded share-based compensation expense associated with our equity awards in the various expense categories in the Consolidated Statements of Income as set forth in the following table. In addition, $0.7 million and $1.0 million of share-based compensation cost was capitalized as real estate facilities for the three months ended March 31, 2023 and 2022, respectively.

	Three Months Ended March 31,
	2023		2022
	(Amounts in thousands)
Self-storage cost of operations	$	4,210	$	4,864
Ancillary cost of operations	31		266
General and administrative	5,604		8,798
Total	$	9,845	$	13,928

Included in share-based compensation is $0.5 million and $